Toshiba posts net loss for the year, executives apologise for accounting scandal

Toshiba posts net loss and revamps board as it seeks to put scandal behind it.

TOKYO, JAPAN (SEPTEMBER 7, 2015) (REUTERS) – Japan’s Toshiba Corp on Monday (September 7) booked a net loss for the past financial year and pledged to improve governance with a revamped board of directors, raising hopes it was finally moving beyond a $1.3 billion accounting scandal.

The submission of its books, twice postponed due to its accounting woes, helped to allay concerns among some investors that the laptops-to-nuclear power conglomerate risked a delisting if it had missed its latest filing deadline.

Shares in Toshiba jumped 4.9 percent by the end of morning trade, but they have lost nearly 30 percent since its accounting issues were disclosed in early April. Analysts also noted the company still had to tackle deeply rooted problems.

“Once again, I would like deeply to apologise, beginning with stakeholders such as stock owners and investors,” Toshiba Corp’s Chairman of the Board and Director, Masashi Muromachi, said during an earnings news conference.

“We are repeating ourselves, but as Toshiba, we take what happened with this incident very seriously,” Toshiba Corp’s Accounting Manager Yukikazu Watanabe added.

For the past financial year, it reported a 37.8 billion yen ($318 million) net loss. It had at one time expected a 120 billion yen net profit before pulling that estimate in May when it announced the accounting probe was being expanded.

All in all, Toshiba said it had overstated profits going back to fiscal 2008/09 by 155 billion yen ($1.3 billion).

The accounting probe found in July that Toshiba suffered from dysfunctions in governance and a culture of discouraging employees from questioning their superiors, prompting the company’s CEO and several other board members to step down.

The Japanese government on Monday ordered a thorough investigation into the matter.

“It is extremely problematic that Toshiba’s past earnings had to be adjusted. Its securities report for the last fiscal year were twice delayed, and they had not given the markets precise and correct information. As the government we’d like to see a thorough investigation into Toshiba’s falsification of the security report in order to guarantee fairness in the stock exchange and to protect investors,” top Japanese government spokesman Yoshihide Suga told reporters.

Toshiba announced on Monday that former Shiseido president Shinzo Maeda would be the head of a revamped 11-member board, the majority of which are external directors, pending approval at an extraordinary shareholders’ meeting on Sept. 30.

Shiseido is widely regarded as an early adopter of improved corporate governance practices in Japan. Under Maeda’s watch, it brought in external directors to its board for the first time.

The accounting scandal is Japan’s biggest since 2011 when camera and medical device maker Olympus Corp was found to have been involved in a $1.7 billion scheme to conceal two decades of investment losses. Olympus was subsequently fined 700 million yen and some former executives were given suspended jail sentences.

The Nikkei business daily reported earlier that the bourse is expected to fine Toshiba 91.2 million yen for undermining investor confidence. Financial regulators are considering a fine, sources have said.